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Fourth Circuit a "maddening mixture of getting some things right and some things very very wrong"

February 13, 2007

Post by Blog Staff

William Patry, author of a treatise on copyright law, has an interesting post on his copyright law blog about a decision yesterday in the Fourth Circuit. The facts of the case are relatively simple the plaintiff owned a copyright on some architectural plans that the defendant obtained an unauthorized copy of. The defendant used the plans to have his house built. The plaintiff sued, seeking damages both for the cost of the plans as well as the profits on the house, as well as an order either preventing the defendant from selling the house or requiring its demolition. The court eventually held that damages for the infringement were sufficient to compensate the plaintiff, and did not enter an injunction.

So what went wrong? Details of the errors Mr. Patry noted after the jump.

There are separate registrations necessary for architectural plans and architectural works. In order to seek damages based on the sale of the completed home, the plaintiff needed to have a registration on the work, not just the plans. So, the jury could only have awarded damages for infringement in the copyright of the plans (which they, in fact, did). The catch is that because there was no registration for the architectural work and because registration is a mandatory prerequisite to bringing an infringement claim, strictly speaking there was no subject matter jurisdiction to hear that portion of the plaintiff's claim. Oops.

The more interesting aspect of the case deals with the first sale doctrine. That doctrine applies to prevent a copyright holder from keeping the owner of a lawful copy from disposing of that copy in whatever manner the owner wishes. The first sale doctrine protects, for example, loaning a book you purchased to a friend. You aren't making an additional copy, so the copyright holder's rights only extend to the first sale of the book to you, not to what you do with it afterward.

How does this apply here? The answer is, it shouldn't, because the jury already found that the defendant's copy of the house plans was not a legal copy. Because the first sale doctrine only protects lawful copies, it should not have applied here. However, as Mr. Patry notes, the Fourth Circuit found that once the plaintiff was awarded damages for infringement, the plaintiff was "made whole," and the copy was transformed into a legal copy. This allowed the court to use the first sale doctrine to find that an injunction against future sale or lease of the house would be inappropriate.

Of course, the court could have made its reasoning much simpler. To quote Mr. Patry:

[S]ince only architectural plans were at issue, this relief would have been outside the court's subject matter jurisdiction. The argument, moreover, was based on the radical view that there can be a distribution of a house within the meaning of the Copyright Act merely by selling it. I disagree: there can only be a distribution by physical transfer of the copy, not by transfer of the title to the copy. In the case of an architectural work, that means selling it and moving it to a different location.

All in all, an interesting copyright case, both for its facts, and for the court's treatment of the facts. It will remain to be seen whether the court decides to rehear the case to "clean up" its reasoning, or whether it will take a future case to clarify these aspects of copyright law in the Fourth Circuit.

Update (7/5): The Fourth Circuit today issued a revised opinion after panel rehearing. There, the court addresses some of Mr. Patry's concerns by at least "softening" some language. For example, regarding sale of the infringing house as a "distribution," the court now notes that the sale "could" expose the defendant to additional liability, and cites (although with a "cf." signal) Mr. Patry's argument that such a sale is not a "distribution." The court doesn't really address the issues regarding proper registration, but gives a lengthy description that in some instances the required pre-litigation registration does not have to be coextensive with the scope of the copyright sought to be enforced, such as when a derivative work is at issue. All in all, it is good that the court addressed some of the issues, but the decision is still muddy. In fact, Mr. Patry is still unimpressed with the court's decision.

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